Analysis & Opinion

JUBA (Reuters) - South Sudan accused Sudan of trying to build an "illegal" 25-km oil pipeline crossing the border towards the South's oil fields, a day after talks to resolve a damaging oil dispute between the two sides were postponed.

A Sudanese government spokesman was not immediately available to comment.

The two former civil war foes have been locked in a bitter dispute over oil payments and other issues, and clashes in the ill-defined border region last week gave rise to concern they might blow up into a new war.

Landlocked South Sudan - which seceded from Sudan in July - shut down its entire 350,000 barrel per day oil production in January as part of the dispute, although crude oil brings in 98 percent of its state revenues.

South Sudan's army "discovered an illegal pipeline that was being built by Sudan ... This is oil piracy," military spokesman Philip Aguer said by phone on Thursday, a day after South Sudan said it had shot down a Sudanese MiG-29 aircraft over South Sudan's oil-producing Unity state.

It is not clear when the pipeline was built but Aguer said the army captured two earth excavators that were being used by a "foreign company" to help extend the pipeline towards Unity state.

Alleged photographs of the pipeline seen by Reuters showed a pipe of around 10-inch diameter lying on the black earth next to a shallow trench.

South Sudan broke away from Sudan after a referendum last year in which the South voted overwhelmingly for partition after almost 50 years of unbroken rebellion against Khartoum.

The division gave South Sudan about three quarters of the country's oil production, but it must still use pipelines and other facilities running through Sudan to export it, and the two have failed to agree how much it should pay to do this.

South Sudan's army briefly occupied an undefined portion of Heglig town last week before pulling out. Heglig oil field lies in a contested border region currently controlled by the Sudanese Armed Forces and accounts for roughly half of Sudan's 115,000 barrel per day oil output.

South Sudan previously accused Sudan of building another tie-in pipeline to Khartoum's refineries with a capacity of 120,000 barrels per day.

Sudan and South Sudan routinely trade accusations of supporting insurgencies in each other's territory.